Migrate on-prem servers to Azure Cloud

Hello experts,

I was looking for some advice regarding moving to Azure Cloud. I hope I am in the right spot for the below question.

We have a small infrastructure of two database SQL servers, an RDS environment of one gateway, one terminal server, and two DCs(one physical and one VM). All the servers, except one physical primary domain controller, mentioned are VMs. I am planning to move the infrastructure to the Azure cloud since we are already syncing all our users and groups in Office 365 using AD connect, but I am not sure what will be the best practice to do so. I did some research and found two options below:

1) Spin up RODC in the Azure cloud and sync with on-prem DC(physical server). Migrate all the VMs to the Azure cloud using Azure Migrate and add them to the domain using RODC. I understand that we will need some site-to-site VPN for both DCs to talk to each other. Will this be a better option?

2) Move all the VMs to Azure Cloud and join them to Azure Active Directory and then join all endpoints to Azure Active Directory since all users and groups are already synced with Azure AD connect and are in Office365. After this, decommission the DC? I prefer this method, but I am unsure if there are any issues I am missing that might come up. We are a non-profit, so keeping the cost in mind too.

If anyone can, please advise what might be the best option or if I am missing any third option to move infrastructure to the cloud.

Thank you so much!